Realignment of the gas pricing mechanism by insulating the consumers from the spikes in global prices will soften prices and will provide much needed relief to the transportation sector, SIAM President Vinod Aggarwal said on Friday.
In a statement, he noted that the measure will also help in re-igniting interest in CNG vehicles in India and would go a long way in promoting a clean alternative fuel in various parts of the country.
"Incentivising greater production of natural gas will result in reduction in import dependence of conventional fuels, thereby enabling expansion of CNG infrastructure across the country and facilitating wider availability of CNG for vehicles," Aggarwal stated.
The Union Cabinet on April 6, approved a revision in the formula for pricing of natural gas and imposed a cap or ceiling price to help cut CNG and piped cooking gas prices by up to 10 per cent.
Natural gas produced from legacy or old fields, known as APM gas, will now be indexed to the price of imported crude oil instead of benchmarking it to gas prices in four surplus nations such as the US, Canada and Russia, Union I&B Minister Anurag Thakur told reporters after a meeting of the Cabinet.
APM gas will be priced at 10 per cent of the price of a basket of crude oil that India imports (Indian basket of crude oil). The rate such arrived at, however, will be capped at USD 6.5 per million British thermal units.
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There will also be a floor or base price of USD 4 per mmBtu.
Rates of piped cooking gas, called PNG, and CNG have jumped 80 per cent in one year to August 2022.
This follows a spurt in international energy prices.
